Financing Instruments for Climate Resilience in Africa:

The Case of the Nile Basin

Gustavo Saltiel Program Manager

Africa Water Resources Unit The World Bank

1st ICA Water Platform Meeting (Session 3)

March 9, 2012 Frankfurt, Germany

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Overview of Presentation

• The Water Situation in Africa

• Case Study: Engagement in the Nile Basin

• New World Bank Financing Instruments

(i) The Climate Investment Funds (CIF) and the Pilot Program for Climate

Resilience (PPCR) Example: Niger (ii) The Cooperation in International Waters (CIWA) Trust Fund

• Conclusions

The Water Situation in Africa

• Water is central to Africa’s development (food security, energy, human well-

being and environmental health), but management and development are

challenging:

– Productive use of water is severely under-developed:

• Only 5% of Africa’s cultivated land is irrigated; rain-fed subsistence agriculture sustains

majority.

• Less than 10% of hydropower potential has been tapped (compared to 75% in Europe); ~

one fifth of population has access to electricity.

• Almost 40% of Africans do not have access to safe water; even fewer to sanitation.

• Average storage capacity is only about 200 cubic meters/person/year (compared to nearly

6000 in North America).

– Twin ‘legacies’ of very high hydro-climatic variability and risks (across time

& space) and 60+ rivers that cut across national boundaries.

The Water Situation in Africa (2)

• In challenges lie the opportunities:

Productive use of water and

mitigating climate risks is

achievable through cooperative

management & development of

shared water resources.

• With a changing climate and

increasing variability – including

extremes of floods and droughts –

comes a greater necessity to work

cooperatively towards managing

risks and building a climate

resilient future.

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• The Nile Basin is already susceptible to climate risks – the worst in Africa. • Floods and droughts routinely cause devastation in the region. • High spatial and temporal variability is also a challenge for agriculture, water resources management, hydropower generation, etc.

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Nile Basin

Weighted Anomaly of Statistical Precipitation (WASP) IndexSource: IRI (2009) for World Bank Africa Region Water Resoruces & Climate AAA

The Nile Basin Examples: • Kenya: Between 1997 and 2000,

floods and droughts were estimated to reduce GDP by 10-16% in each of the three years.

• Ethiopia: Hydrological variability was found to cost the economy 38% of its potential growth rate and cause 25% increase in poverty rates.

New Nile Basin Climate Resilient Growth Program - Introduction

• This new program will support NBI’s long-term objectives through its programmatic pillars (cooperation, WRM, WRD), all of which are working towards climate resilient growth

• Two phases of support over 5 years --> First Phase: $15 m from 2013 to 2015 --> Second Phase: $30 m proposed from 2015-2018 --> Financing for all 3 NBI Centers

• Programmatic approach with focus on results and use of performance indicators --> Disbursements are made against results

• Increased country commitment, including financing

• Flexibility given changing context

New Nile Basin Climate Resilient Growth Program – Programmatic Approach

• Support elements of NBI’s program that also strengthen climate resilience • Program falls into two tracks: - Track 1: Grant Financing (Investment preparation, Knowledge Management

and Cooperation Services) - Track 2: Investment Implementation and detailed project design

Track 1: Grant Financing

Nile Basin Knowledge and Facilitation Services: Support through Nile Basin Climate Resilient Growth Program

Track 2: Investment Implementation Nile Basin Investment Programs – Support through traditional World Bank Financing + new Instruments Ex

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New Nile Basin Climate Resilient Growth Program – Results-based Support

• A results based project creates a direct link between disbursement of financial contributions and the achievement of specific results.

• Results can include actions, outputs, and/or outcomes so that funding flows throughout course of project (not only at completion)

• Requires in-depth assessment of client capacity (mgmt., fiduciary, env./social, etc) and action plan (if necessary) to strengthen capacity, as there is less donor oversight than in traditional projects

Proposed Components: (i) NELSAP: Advancing investment preparation of hydropower generation, irrigation and watershed development, and undertaking consultations (including regional investment forum). (ii) ENTRO: Scaling up of watershed management project, development of framework for climate-resilient WR planning and development and dam safety; and increasing flood resilience through flood mapping, info mgmt, and training. (iii) Nile-SEC Improving modeling and knowledge services for IWRM (including dev. of an integrated KM system), operationalization and maintenance of Nile Decision Support System; and delivering improved services for governance bodies and stakeholder to facilitate cooperation.

* CIWA = Cooperation in International Waters Trust Fund

Financing Instruments

• Two new instruments would be available:

• Under the Climate Investment Funds (CIFs), administrated by the World Bank, new funding instruments are being explored to manage the complexity and costs associated with climate resilience and adaptation programs. These include the Pilot Program for Climate Resilience (PPCR).

- The PPCR instrument aims to pilot and demonstrate ways to integrate climate risk and

resilience into core development planning and implementation.

- Strategic Programs for Climate Resilience (SPCRs) help to coordinate PPCR activities; SPCRs developed in AFR so far include those in Niger & Mozambique.

• CIF / SPCRs fund largely Track 2 (Detailed design and project implementation) activities

• The Cooperation in International Waters (CIWA) Trust Fund New Trust Fund instrument who goal is to to strengthen cooperative management and development of international waters in Africa to facilitate sustainable, climate resilient growth

• CIWA funds largely Track 1 (investment preparation) activities

Pilot Program for Climate Resilience (PPCR)

Measuring Success

• Increased capacity to integrate climate resilience into development

• Increased awareness of vulnerabilities and potential impacts

• Scaled-up investments for broader interventions and programming

• Improved coordination among stakeholders

• Capture & transfer of lessons learned

Purpose To help highly vulnerable countries pilot and demonstrate ways to

integrate climate risk and resilience into core development

planning while complementing other ongoing activities.

Scale US$ 992 million in pledges, mainly grants with option to augment with

IDA-like/highly concessional resources.

Governance Sub-Committee: Australia/UK, Bangladesh, Canada, Denmark/Norway,

Germany, Jamaica, Japan, Samoa, Tajikistan, USA, Yemen, Zambia,

the Adaptation Fund Board + observers (4 civil society, 2 indigenous

peoples, 2 private sector, 1 rep. of community dependent on adaptation

approaches), GEF, UNDP, UNEP, UNFCCC

Mainstreaming new Instruments for Climate Resilience:

• Climate is characterized by high variability especially in terms of rainfall. Over the past forty years, the country has experienced seven episodes of droughts

• Chronic food insecurity affects half of the population and there is a heavy dependence on food aid during major droughts

• During the most recent drought in 2010, agricultural output fell 12% below the average and malnutrition affected 32% of the population

• Drought impacts are exacerbated by the extensive, “low-input”, “low-output” agricultural and livestock practices soils exposed and vulnerable to erosion

• Other climate-related hazards include floods, sandstorms and locust invasions.

For Niger improved climate resilience

and improved food security go hand in hand

Example: Niger SPCR

Context

Improved mainstreaming of climate resilience into poverty

reduction and development planning strategies

Climate information and forecast

Tools of climate and environmental resilience for practitioners and policy makers

Capacity building and communication strategy

CLIMATE INFORMATION DEVELOPMENT AND FORECASTING PROJECT(PDIPC)

Investing in proven and innovative approaches which increase resilience to climate

change

Support to sustainable land management

Social protection

Insurance against climate risks

COMMUNITY ACTION PROJECT FOR CLIMATE RESILIENCE (PACR)

Support to integrated management of water resources

PROJECT FOR THE MOBILIZATION AND DEVELOPMENT OF WATER RESOURCES (PROMOVARE)

Providing knowledge management and strategic

coordination of the program

Strategic coordination of the activities of the program

Knowledge management

PACR + PDIPC + PROMOVARE

Pillars of the SPCR Activities Investment projects

Activities and Projects Under Niger SPCR

The CIWA Trust Fund (1)

• Cooperation in International Waters in Africa (CIWA) Trust Fund has recently been established

– The objective is to strengthen cooperative management and development of

international waters in Africa to facilitate sustainable, climate resilient growth.

– Can support regional cooperation, upstream technical assistance, pre-investment activities, institutional strengthening, capacity building and knowledge sharing, stakeholder engagement and communication, etc.

• This new instrument can be utilized to support a

new generation of climate-related activities in Africa, based on the need, demand, and readiness.

• CIWA is funded through a Multi Donor Trust Fund administered by the World Bank in accordance with its operational procedures.

What is CIWA?

• Focus: CIWA incorporates key current development issues – climate change, disaster risk management, etc. and has a clear Investment Focus. The program is oriented towards facilitating growth and development that will have real impact on the continent.

• Long Term Program: 10 years (2011 – 2020).

• Funding Available: Initial contributions = $ 20 M (DFID + DANIDA)

• Rationale: to bring together the experience gained in different river basins into a focused initiative to support cooperation in international waters.

• Immediate beneficiaries: River Basin Organizations (RBOs), riparian governments and Regional Economic Communities (RECs) and other relevant regional agencies.

The CIWA Trust Fund (2)

• The Water Situation in Africa: Twin ‘legacies’ of (i) very high hydro-climatic variability and risks (across time & space) and (ii) 60+ rivers that cut across national boundaries. • Urgent needs for financing the continent’s water security + adaptation “deficits”: There is a need for both “hard” ( > $10 billion/year) and “soft”(>$1 billion/year) investments. Case Study: Engagement in the Nile Basin • The Nile Basin Climate Resilient Growth (NBCRG) program embodies a new approach to support the NBI’s long-term objectives that is programmatic, results-oriented, and focuses on select activities that promote climate-resilient growth in the Nile basin. • The NBCRG program provides grant financing for “Track 1” (Investment preparation) activities – while “Track 2” (Investment Implementation and Detailed Project Design) activities are being picked up by WB and other DPs through more “traditional” funding mechanisms.

Conclusions (1)

• ICA Water Platform, CIF, CIWA, and others are interesting initiatives:

•The Climate Investment Fund (CIF), under which the Pilot Program for Climate Resilience (PPCR) supports largely Track 2 – Investment implementation and project design activities. • The Cooperation in International Waters (CIWA) Trust Fund (which supports largely Track 1 – Investment preparation activities). -Includes support to the Nile Basin Climate Resilient Growth program

- However: a new generation of Adaptation Financing instruments is needed to respond to the impacts of climate change through significant investment programs

Conclusions (2)

Thank you for your attention.

Gustavo Saltiel Program Manager

Africa Water Resources Unit The World Bank

gsaltiel@worldbank.org

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